The Colson Company issued $300,000 of 10% bonds on January 1. 2017 The bonds are due January 1, 2022, with interest payable each July 1, and January 1 The bonds are issued at face value Prepare Colson's Journal entry for the December 31 Adjusting Entry O Interest Expense $15.000 Cash $15 000 O Cash Interest Expense S15.000 $15 000 O Interest Expense Interest Payable $15.000 $15.000 O Interest Payable $15.000 Interest Expense $15.000
The Colson Company issued $300,000 of 10% bonds on January 1. 2017 The bonds are due January 1, 2022, with interest payable each July 1, and January 1 The bonds are issued at face value Prepare Colson's Journal entry for the December 31 Adjusting Entry O Interest Expense $15.000 Cash $15 000 O Cash Interest Expense S15.000 $15 000 O Interest Expense Interest Payable $15.000 $15.000 O Interest Payable $15.000 Interest Expense $15.000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Colson Company issued $300 000 of 10% bonds on January 1, 2017 The bonds are due January 1, 2022, with interest payable
each July 1, and January 1. The bonds are issued at face value.
Prepare Colson's Journal entry for the December 31 Adjusting Entry
O Interest Expense
$15 000
Cash
$15 000
O Cash
S15 000
Interest Expense
$15 000
O Interest Expense
Interest Payable
$15 000
$15.000
OInterest Payable
$15.000
Interest Expense
$16.000
Expert Solution
Step 1 Explanation:
Colson company will pay interest semi-annually i.e on each July 1 and January 1.
Hence company will book interest expense on year end date and will create liability by crediting Interest Payable A/c.
Journal entry on year end December 31 i.e in between interest payment date will be:
Interest Expense A/c Dr.... xxx
To Interest Payable A/c. xxxx
(Being accrued interest expense booked for 6months)
Note: Interest expense A/c will hit profit and loss account while Interest Payable A/c will appear in year end Balance sheet.
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